Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
By Joe Kirwin
The European Commission launched legal proceedings against Portugal, Bulgaria, and Cyprus for not adopting, in their national laws, European Union legislation requiring all EU countries to exchange tax rulings granted to multilateral companies.
The legislation was adopted in the wake of the 2014 LuxLeaks scandal that revealed more than 100 individualized tax rulings the Luxembourg government secretly signed with multinational companies such as McDonald’s Corp. and Amazon.com Inc. The measure (EEC/2015/2376) was required to be on the books of each EU country by the end of 2016; the first exchange among EU country tax authorities is due to take place in September.
“The new rules are designed to help clamp down on cross-border tax avoidance, aggressive tax planning and harmful tax competition,” the commission said in a July 13 statement announcing the launch of legal proceedings against the three countries.
Bulgaria, Cyprus, and Portugal now have two months to reply to the European Commission. If the three countries don’t respond, the commission has the authority to bring a member nation before the European Court of Justice. EU law requires the commission to issue two legal warnings before it can file a charge in the court.
Bulgarian spokeswoman Genoveva Chervenakova said July 17 that the Bulgarian draft national legislation to adopt the EU directive was published and sent to the Bulgarian parliament last December. She added that the resignation of the Bulgarian government at the beginning of 2017, as well as subsequent elections, meant the process had to start again from the beginning.
Final adoption “should take place by the end of July,” Chervenakova told Bloomberg BNA in an email.
Officials from the Cypriot and Portuguese governments didn’t respond to requests for comment.
The European Commission also announced that the Czech Republic, Greece, Hungary, and Poland adopted legislation to incorporate the directive into their national laws following a legal warning. Meanwhile, the EU executive body said it will “assess whether the legislation of all member states complies with all requirements of the new rules.”
Aside from the legal scrutiny over the tax ruling legislation, European Commission competition officials are investigating more than 100 tax rulings that Luxembourg and other governments have forged with multinational companies to determine whether they violate EU rules against providing government aid to selected taxpayers.
The European Commission has already taken action against Ireland, forcing it to retrieve approximately $14.5 billion from Apple Inc. in back taxes because the EU’s competition authority said a tax ruling between the company and Ireland signed in the 1990s violated EU state aid rules. A similar illegal state aid decision was taken against the Netherlands concerning a tax ruling it signed with Starbucks Corp. Both Ireland and the Netherlands have appealed the commission’s decisions.
To contact the reporter on this story: Joe Kirwin in Brussels at email@example.com
To contact the editor responsible for this story: Penny Sukhraj at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)